We have delivered our best quarter ever, in a tough environment. Organic growth was 12 per cent in sales and 34 per cent in EBITA, net profit has never been higher, cash flow was good, and leverage decreased materially. Our COVID-19 strategy has been effective in protecting our employees and safeguarding business continuity. After a challenging start, with lockdowns and other COVID-19 related issues, operating conditions stabilized gradually, and we managed to successfully mitigate these challenges. In addition, we supplied the back log from the first quarter. Operating costs in locations highly affected by COVID-19 have been higher, mainly affecting our Sterile Liquids segment. However, we estimate net effects on results from COVID-19 during the quarter to be overall positive for the group.
Thomas Eldered, CEO
During the quarter we managed to successfully mitigate operational challenges from lockdowns and other Covid-19 related issues. In the second half of the quarter we compensated from the April shortfall and in addition managed to supply the back log we had from the first quarter. We therefore estimate net effects on results from Covid-19 during the quarter to be positive. In addition, product mix has been favourable with a material increase in demand for Covid-19 related products and services. This has significantly improved results in the Development & Licensing segment.
Thomas Eldered, CEO of Recipharm
Following the recently completed directed issue, we are now fulfilling the authorisation that the Board of Directors was given from the Annual General Meeting through the share issue of approximately SEK 2.0 billion, with preferential rights for existing shareholders in Recipharm. We are very pleased with the confidence existing shareholders are now showing with shareholders representing about 58.6 percent of the shares having announced that they will subscribe for their respective pro rata shares in the rights issue already in advance. When the rights issue has been carried out, we will have completed the shares issues we announced our intention to make in conjunction with the offer to acquire Consort.
Thomas Eldered, CEO
We are very proud of the interest we have received from well-renowned international investors. Noting that the issue was subscribed in line with the price recently traded on NASDAQ Stockholm also confirms the strong support of our strategy and is a message of strength in these volatile times.
Thomas Eldered, CEO
As a pharmaceutical company we have a strong commitment to contribute to the treatment of COVID-19 patients. There is still a great need for more clinical evidence regarding the use of chloroquine, but we also need to prepare for the event that it could be identified as an effective part of COVID-19 treatment. I am therefore proud that we have been able to source API so quickly and that we are now prepared to build up our stock of chloroquine.
Carl-Johan Spak, Senior VP Strategic Investments and Projects at Recipharm
We continue to make good progress towards the long-term strategic objectives which have propelled Recipharm into a top 5 global CDMO. Our strong operational and financial foundations and deep expertise helped us deliver organic growth of 4 per cent in sales and no less than 21 per cent in EBITA, increase margin, progress our integration activities and adapt our business to respond to the dynamic situation COVID-19 presents. /.../ In summary, our operations are performing as planned or better, but in the short to medium term, like most across the industry and wider, we face significant uncertainty and I cannot exclude further impact on our sales and profit. That said, our long-term prospects remain unchanged. Demand is stable or even increasing and we have seen operating conditions stabilize compared to March/April. I am confident that our great teams will be able to continue to mitigate the challenges the COVID-19 situation may bring. Our strong reputation for customer satisfaction, uninterrupted during these difficult times, will bring recognition and further benefits as we leverage our top five position in the global CDMO industry.
Thomas Eldered, CEO
There is already some rationale that mucolytic drugs could be part of the treatment of COVID-19 patients. Considering the specific properties of our molecule and the proven clinical results in COPD treatment, we truly hope that Erdosteine could play a role in the treatment of this pandemic pathology.
Dr. Katherine Salessi Nia, Medical Manager for Erdosteine
There is growing demand for inhalable products to treat patients with respiratory diseases and this is an ongoing core focus in our business. Having a role in this industry-leading collaboration is an exciting opportunity for Recipharm and as Bespak integrates into our business, we look forward to working closely with Perrigo and Catalent to ensure the commercial success of this important new product.
Jean-François Hilaire, Executive Vice President Strategy & Global Integration, Recipharm
We are delighted to present the 2019 award to Dana Kolpin. His work represents a pioneering approach to exploring the potential effects and risks of contaminants, including pharmaceuticals, on the environment. His research has been both influencial and inspirational for other scientists in this field and has without doubt been essential in building a stronger understanding of the environmental impact of various types of contaminants.
Lars Backsell, Chairman of the Board of Recipharm
I am very honoured to receive this award and thank Recipharm for the recognition of the research that has been conducted by me and my team. It is satisfying to know that our work has inspired others to conduct environmental research on this rapidly evolving topic. Since the start of my career, science has come a long way regarding the understanding of the potential consequences from contaminant exposures, but there more to be understood, particularly when it comes to the effects of chronic exposures to complex mixtures of environmental contaminants. We need to take stock of where we are and what we have learned to better position our future research priorities in both the short and long term.
Dana Kolpin, Research Hydrologist at the U.S. Geological Survey Central Midwest Water Science Center in Iowa City, Iowa
The good performance we saw in the third quarter has continued to further improve. Today I’m therefore pleased to report our strongest quarter ever. It also means that results for the second half of 2019 exceeded the first half of the year for the first time ever. We continue to report double digit organic growth and we saw strong growth across all three business segments and in all geographies where we operate. With full year net sales of SEK 7.5 billion we are well positioned to reach our previous target of SEK 8.0 billion without further acquisitions. /..../ We have recently announced new, more ambitious, targets going forward, but our strategies remain unchanged. The acquisition of Consort will give us leadership in selected markets and with the resources in the combined group we are ideally positioned to continue to build powerful long-lasting partnerships with our customers, explore exciting opportunities and build an even stronger position in our industry.
Thomas Eldered, CEO
We are excited to confirm the acquisition of Consort. There are many complementarities between our businesses and exciting times lie ahead as we work together to create a leading advanced delivery systems company and top 5 global CDMO. The deal enhances our competitive position in the market, expanding the scale and breadth of our service offering so we can become a true end-to-end partner for our customers. In particular, the deal strengthens our inhalation drug product offering which is a key area of growth for our business following the creation of Recipharm Inhalation Solutions™ in 2019.
Thomas Eldered, CEO at Recipharm
I am proud to be taking on the position of CEO of Consort having spent many years within the Recipharm leadership team. On behalf of Recipharm, I would like to welcome all new employees to our family and look forward to a bright future for all as we work to integrate our businesses and deliver value to customers.
Mark Quick, Recipharm’s EVP Corporate Development
We are pleased to be able to contribute to the development of Aptahem's leading drug candidate which has the potential to meet the major medical needs that exist for sepsis patients. Recipharm has extensive experience in developing drugs for clinical trials, as well as in commercial manufacturing and we believe that our team’s expertise will be a very valuable asset during this new collaboration.
Anders Högdin, Ph.D., Senior Sales Director at Recipharm
We are extremely pleased to be able to access the strong competence and experience that Recipharm has through this agreement. Choosing a partner to help us progress our drug candidate is a significant milestone. We are now moving at full speed ahead in the development process of Apta-1 and with this cooperation now established I am convinced that we will be able to accelerate further.
Mikael Lindstam, CEO of Aptahem
By employing the SprayVIEW® system and expanding our expertise in this technique, we are strengthening our capabilities in inhalation and nasal product development and manufacturing.Inhalation products are extremely complex to develop and manufacture and it is important to understand potential interactions between the formulation and the delivery device throughout the development stages. Acquiring a SprayVIEW® system has allowed our development team to successfully characterise a nasal spray product currently under development. In addition, our expertise in this technique adds new services for our innovator and generics customers who are coming to us for inhalation and nasal product development, as well as for standalone SprayVIEW® analysis.
Lei Mao, Director Inhalation Science and Product Development at Recipharm
Recipharm’s end-to-end development and manufacturing capabilities mean we have been able to support RedHill throughout the entire journey to market. We’ve been working closely with RedHill over the past few years to develop and manufacture Talicia®, so gaining FDA approval marks an important milestone in the journey and is testament to the hard work of both teams.
Erik Haeffler, VP of Manufacturing Services
This is a significant moment in our shared collaboration with Recipharm. We have been working diligently to develop and receive FDA approval for Talicia®. This would not have been possible without the mutual activities and work by all of the teams at RedHill and Recipharm, at three different sites.
Reza Fathi, Senior Vice President R&D at RedHill
Recipharm’s strategy is firm, we have a good foundation for continued long-term and competitive value creation. Our decentralised business model promotes the entrepreneurial spirit in which strong leaders develop and drive our operating companies to continuously improve. Our financial targets guide our work to continued profitable growth.
Thomas Eldered, CEO
AMR is currently one of the most serious health concerns worldwide. At Recipharm, we manufacture antibiotics in Sweden, Italy and India so it’s important that we get involved in developing solutions to combat AMR. Joining the AMR Industry Alliance was the next natural step for us to take our work on AMR to the next level and allow us to engage with other stakeholders on the subject. /.../. We’re confident the alliance will allow us to continue working with experts in the field of AMR and take positive steps towards developing potential solutions.
Erik Haeffler, VP of Manufacturing Services and Head of Sustainability at Recipharm
We welcome Recipharm as a new member of the alliance. In recent years we’ve seen more and more companies recognising and addressing AMR and we’re delighted to see a leading CDMO like Recipharm committing to the objectives of the AMR Industry Alliance, including minimizing antibiotic emissions from the manufacturing supply chain.
Steve Brooks, Chair of the Manufacturing Working Group at the AMR Industry Alliance
The good performance we saw in the second quarter has continued and further improved. Today I’m therefore pleased to report our strongest ever third quarter. Net sales increased 26 per cent over the previous year with a good contribution from the newly acquired inhalation business. Organic growth was 11 per cent and we see strong growth across all three business segments and in all geographies where we operate. /.../ We are clearly benefitting from our global reach and our competitive value proposition to customers as we are taking leadership in selected markets. Our objectives and strategies remain unchanged. We will continue to build powerful, long lasting partnerships with strategically important customers, in addition to adding further technologies and differentiating businesses, based on customer needs.
Thomas Eldered, CEO
Three years after acquiring Nitin Lifesciences Ltd from the Sobti family, we have confirmed our initial views that the Indian-based operations offer high-level expertise and low-cost options for drug development and manufacturing. We have been impressed with Nitin’s strong financial performance on the domestic market as well as with export activities to emerging markets. This is the outcome of Nitin being well positioned at the high-quality end of this market segment, allowing it to saturate its production capacity with available demand. The excellent leadership of Dr. Chetan Sobti, as CEO and Nitin Sobti, as COO, are also key factors in the company’s success.
Thomas Eldered, CEO of Recipharm
Our understanding of the entire drug development and manufacturing process delivers many benefits, including the ability to develop robust methods made for the stream-lined conditions within QC labs. We are used to working closely with formulation development teams with regulatory implications in mind. We also understand the logistics involved in the scale-up and tech transfer of a drug product, meaning transferring analytical methods should never be an issue.
Dr. Ramesh Jagadeesan, Director of Analytical Development at Recipharm
We are pleased to announce this divestment which allows us to focus on delivering a comprehensive offering from medicinal chemistry through to commercial API manufacturing. This step also further improves the Recipharm Pathway to Clinic offering, where Recipharm continues to facilitate clinical trials by developing and supplying the clinical trial material. The GLP laboratory will now operate within the same group as CTC Clinical Trial Consultants which is a far more logical approach and will result in the even more efficient conduct of clinical trials ultimately improving the result for our customers.
Maria Lundberg, VP Global Analytical Development at Recipharm
Through the formation of Lablytica as a sister company to CTC Clinical Trial Consultants we believe we will be able to offer a more integrated approach and develop the services for our customers using the talented staff and facilities in the GLP bioanalysis business. The partnership with Recipharm provides a complete solution for first-in-human projects.
Bengt Dahlström, Chairman of the Board at CTR
For the sixth consecutive quarter I’m pleased to report record high sales for the quarter. We are also reporting sequential improvement of sales, profitability and cash flow. Net sales increased 10 per cent compared to Q2 2018, corresponding to the net of acquisitions and discontinuing operations. EBITDA increased by 15 per cent and in addition to acquisitions we report good contributions from serialisation, new sterile products in new capacities and our new global development organisation while non-lyophilized injectables and oral solids underperformed during the quarter. EBITDA margin in the quarter increased to 19 per cent, 20 per cent excluding discontinuing operations. Changed accounting standard contributed 1.2 percentage points. /.../ Our current structure has considerable potential for growth and improved performance, also in the short term, but I’m not satisfied with the organic growth in the quarter. We know what to do and expect the increased business momentum we began to see towards the end of the second quarter to continue and strengthen during the rest of the year. We are well on track to reach our overall targets.
Thomas Eldered, CEO
The Recipharm team has a long history in inhalation drug product development and manufacturing. This heritage, combined with market demand, made the launch of Recipharm Inhalation Solutions™ a logical step for us. Our team has the depth of knowledge required to overcome the challenges associated with developing and manufacturing these types of products. We also understand the hurdles on the path to commercialisation and are well placed to manage complexity and risk along this journey.
Shabbir Mostafa, Global Key Account Director
We are delighted to present the 2018 award to Bryan Brooks. His work, which explores the potential effects and risks of contaminants, including pharmaceuticals, on the environment is widely recognised in our industry and beyond. This research will help to build a greater understanding of the impact of certain contaminants on the environment and could potentially provide invaluable guidance on how to reduce any negative effects.
Lars Backsell, Chairman of the board of Recipharm
I am humbled and honored to receive this award from Recipharm, which I warmly accept on behalf of our current and former students. I am grateful for support from Baylor University, my long time collaborators Prof. Kevin Chambliss and Dr. Duane Huggett, and other close colleagues with whom we are engaging research on six continents. /.../ Our research examines interfaces among environment and health with a goal of understanding and managing challenges that affect us all, so we’re delighted to be acknowledged for our team’s contributions.
Dr. Bryan Brooks
Recipharm is committed to the ongoing development of its sustainability standards. Achieving ISO 45001 at our first site demonstrates that we can perform to the highest standards when it comes to occupational health and safety. We now start the roll-out across our other facilities as we work towards ensuring we have state-of-the-art management systems in place to manage not only occupational health and safety, but also other areas such as the environmental impact.
Erik Haeffler, Vice President Manufacturing Services & Head of Sustainability
I’m pleased with our achievements during 2018 and we are well positioned to explore further opportunities. Leverage ratios are good and will continue to improve during 2019, following improved profit and decreased capex. The temporary effects we saw during the fourth quarter will disappear during coming quarters and we expect to see a steady development going forward. Net sales grew by 20 per cent in 2018 and with current structure we expect to continue to show good growth in 2019, towards reaching our SEK 8 billion sales target by 2020. At 15.5 per cent in 2018 we didn’t quite reach our EBITDA-margin target of at least 16 per cent while for 2019 we expect to reach our target.
Thomas Eldered, CEO
Recipharm has been very committed to meeting compliance deadlines, establishing a dedicated task force three years ago. A lot of time and effort has gone into our preparations so it’s rewarding to report that we are ready, especially ahead of the enforcement date. Standardising our serialisation capabilities has enabled us to provide a seamless and flexible service to our customers, across multiple markets.
Staffan Widengren, Director Corporate Projects
We are thrilled to welcome Kieran to the Recipharm team to help drive sales and business development activity in North America. We are fully committed to achieving our goals there by offering first class development and manufacturing services. I am certain Kieran’s experience will be an asset to the team throughout that journey.
Kenth Berg, Vice President Business Management
Recipharm’s knowledge and end-to-end offering means it can cater for customised and challenging projects, which will be a great asset in the North American market in the coming years. I’m delighted to be joining the team in its quest for growth and global expansion.
Kieran Chouhan, Director, Business Management US & Canada
We have taken this decision as there is no likely prospect of the facility in Ashton-under-Lyne being able to deliver an acceptable return in the medium term. It has clearly been a difficult choice as any closure will affect approximately 140 of our employees who have demonstrated commitment and hard work to provide high quality products and services. It is our intention to ensure fair and respectful treatment to all throughout this process and redeploy people where possible within the Group in the event of closure. Such a change will enable us to focus our attention on the most competitive and efficient manufacturing facilities in our Group. At a strategic level, we continue to pursue our mission to develop and manufacture pharmaceuticals for demanding customers for global use. As such, our financial objectives remain unchanged.
Thomas Eldered, CEO of Recipharm
The global ADHD market amounts to just over 10bn USD and there is strong demand for new solutions to help better manage this condition that affects a broad patient population. We are very proud to be able to work with OnDosis on such an important project and we believe that our excellent capabilities in drug formulation using coated pellets in Pessac, France, will be very valuable assets throughout the partnership.
Bernard Pluta, President, Development Services, Recipharm
ADHD is a disease area with a significant unmet medical need. It has been confirmed in dialogue with patients and healthcare professionals that ADHD is an area which can gain significant benefits from the new treatment regimen made possible by OnDosis technology. The decision to commence development of a formulation, which will be integrated with OnDosis technology, marks an important milestone for our company and we’re delighted to be working with Recipharm on this critical development work.
Martin Olovsson, CEO of OnDosis
This is an important recognition of the scientific value of our molecule and it has been achieved thanks to the outcomes of the recent clinical studies which proved Erdosteine to be effective in the treatment of COPD patients. We are confident that Erdosteine is going to play an increasing role in the treatment of this pathology.
Pierfrancesco Manzo, Sales & Business Development Director for Erdosteine
There are only personal financial reasons behind the decision to sell a small portion of my shares in Recipharm. I have no intention to sell any additional shares in the Company. The shareholding in Recipharm represents by far my largest investment. Recipharm is in a very strong position and I see many exciting opportunities to further develop. I look forward to leading the organisation on our continued successful journey.
Thomas Eldered, CEO and co-founder of Recipharm AB
In the third quarter of 2018, we increased net sales to SEK 1,421 million, with a currency-adjusted growth in continuing operations of 14 per cent, and improved EBITDA by SEK 48 million to SEK 151 million and EBITDA margin to 10.6 per cent (8.6). As usual the third quarter was strongly affected by maintenance and vacation shut-downs. Although this is the best third quarter ever for Recipharm, it does not mean that we have reached our full potential. Our expanded capacities, extensive technology range and global reach will drive further improvements going forward. /.../ We expect good contributions from recent important capacity expansion investments to continue over the next years. We also continue to see material contributions to group growth from our India based operations. In the short term we expect the good growth we have also seen in the Solids and Others segment to continue. Our objectives and strategies remain unchanged and we are working hard to reach our overall and long-term goals.
Thomas Eldered, CEO
The decision to stay in Höganäs is a consequence of the increased demand for the technology and capacity we can offer. This has been somewhat unexpected, but we are of course pleased to see new customers entering in Höganäs and that we by this also are able to continue the services to existing customers. We expect to see volume growth already in 2019 and it will allow Recipharm to continue to offer an extensive and competitive manufacturing structure for powders and granules. I am also glad that our highly skilled workforce will have continued employment with Recipharm. They have shown a high level of commitment during this period.
Thomas Eldered, CEO of Recipharm
Over recent years Recipharm has become known for leading the way in meeting the serialisation challenge. We are proud to have reached this milestone four months before the FMD deadline and anticipate that all our facilities will meet compliance by the end of the year. Recipharm is keen to aid companies in meeting compliance on time and ultimately help to create a safer global medicine supply.
Staffan Widengren, director corporate projects and head of the global steering committee for Recipharm’s serialisation programme
Treatments for asthma and chronic obstructive pulmonary disease (COPD) are in high demand and are therefore key growth areas for our business. This new capability allows us to expand our offering to customers developing novel respiratory products by adding additional expertise and manufacturing capacity to Recipharm. We look forward to growing this side of our business and continuing to enhance our wider development services offering.
Thomas Eldered, CEO of Recipharm
The process of connecting to the EU Hub should not be underestimated as it takes a lot of time and effort to complete. We began the connection process in October 2017 and the past 10 months have involved a series of contractual and technical on-boarding steps. This project milestone reaffirms Recipharm’s global leadership in serialisation and our commitment to meeting the compliance requirements well ahead of the February 2019 deadline. We will be using our knowledge to advise our customers on their own connections over the coming months in line with EMVO’s requirements.
Staffan Widengren, Director Corporate Projects and leader of Recipharm’s serialisation programme
TraceLink’s history integrating with the EU Hub dates back two years, with nearly 650,000 serial numbers submitted to the EU Hub by our customers since 2016. Today, while other solution providers are in the midst of conducting pilot tests, TraceLink customers are out front, already live in production with serialisation and officially approved to submit data to the EU Hub. Recipharm is a great example of an organisation that is taking a proactive approach to serialisation compliance and it was a pleasure to support the team with their connection to the EU Hub.
Shabbir Dahod, president and CEO of TraceLink
We are benefitting from our global reach and our competitive value proposition to customers. With our important investments and acquisitions we are taking leadership in selected markets. Our objectives and strategies remain unchanged. We will continue to build powerful, long lasting partnerships with strategically important customers, in addition to adding further technologies and differentiating businesses, based on customer needs.
Thomas Eldered, CEO
This new offering is the latest phase in our company-wide serialisation project which was launched in 2016 following a EUR 40 million investment. In recent years, Recipharm has become known for taking a lead in the serialisation challenge. As the deadline gets closer we’re seeing more and more companies ask if we can provide an outsourced serialisation service that caters for the new requirements, even if the product itself is not manufactured within Recipharm it made sense to allow customers who were struggling with their existing provider to get access to our solution. Implementing these measures independently across packaging lines to ensure compliance is a relatively straightforward process when using offline equipment. Our experience of serialisation means we can ensure compliance quickly and efficiently for our customers.
Staffan Widengren, Director of Corporate Projects at Recipharm and Head of the Global Steering Committee for Recipharm’s serialisation programme
We are very pleased to have reached this agreement with SERB as we believe they are far better placed to maximize the potential of ThyroSafe® by including it within their portfolio of emergency products. Many countries stockpile potassium iodide products to have as a preventive measure in case of sudden radiation exposure, but there are still many countries that have not taken sufficient action in this area. I am confident that SERB will be able to grow the volumes of the product. We are also delighted that we will continue to provide our expertise in the manufacture of ThyroSafe® in the long term.
Carl-Johan Spak, Executive Vice President at Recipharm
Holmes Chapel brings Recipharm an ideal opportunity to accelerate its offering to customers with access to novel respiratory products. As an already successful CMO with several clients, we look forward to introducing new contracts to Holmes Chapel by utilising our growing franchise in development services. Treatments for asthma and chronic obstructive pulmonary disease (COPD) are growing at a fast rate and we see many opportunities. The experienced management team and staff have already successfully attracted new customers and we look forward to building on this from the well invested facility.
Thomas Eldered, CEO of Recipharm
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